Also known as: purchasers for value · bona fide purchaser for value
Written by attorneys — see sources below.
A person who acquires an interest in property or contractual rights by giving valuable consideration. The status typically requires payment of more than nominal value and often good faith without notice of prior claims. This position receives protection against certain prior interests.
Pedro Pacheco and Pioneer Energy signed a supply contract that both believed contained a flexible delivery schedule. A mutual drafting error inserted a rigid timeline instead. When Pedro seeks reformation, the court grants it because no third party acquired rights under the mistaken writing for value.
Peter Park purchased three paintings from a gallery for $35,000. The works had been stolen decades earlier from their original owner. Peter asserts that his payment of value shields him from the owner's replevin claim.
Georgia O'Keeffe, a renowned artist, had three paintings stolen from An American Place gallery in New York in March 1946. The gallery was operated by her husband Alfred Stieglitz. The paintings subject to this action are "Seaweed" and "Cliffs," with a third painting "Fragments" also missing. O'Keeffe did not report the theft to the police or advertise the loss, though she discussed it with associates. Stieglitz died in the summer of 1946. In 1947 O'Keeffe retained Doris Bry to help settle the estate. Bry urged reporting the loss, but O'Keeffe declined. In 1972, O'Keeffe authorized Bry to report the theft to the Art Dealers Association of America, Inc., which maintains a registry of stolen paintings. In September 1975, O'Keeffe learned that the paintings were in the Andrew Crispo Gallery in New York on consignment from Bernard Danenberg Galleries. On February 11, 1976, O'Keeffe discovered that Ulrich A. Frank had sold the paintings to Barry Snyder for $35,000. She demanded their return, but Snyder refused. O'Keeffe filed her complaint for replevin in March 1976 against Snyder, who impleaded Frank as a third-party defendant. The trial court granted summary judgment to Snyder on the ground that the action was barred by the six-year statute of limitations. The Appellate Division reversed and entered judgment for O'Keeffe. The Supreme Court of New Jersey granted certification to consider the issues. Frank traces his possession of the paintings to his father, Dr. Frank, who died in 1968, claiming to have seen them in his father's apartment as early as 1941-1943. Snyder purchased the paintings from Frank in 1975. There are factual disputes regarding the circumstances of the paintings' disappearance and acquisition.
View casePablo Perez acquired a gouache from an art dealer years after its theft from a museum collection. The museum later located the piece and demanded its return. Pablo defends on the ground that his payment of value and lack of notice make him a protected holder against the earlier claim.
The Solomon R. Guggenheim Foundation operates the Guggenheim Museum in New York City. In 1937 Solomon R. Guggenheim donated to the museum a Chagall gouache known alternately as Menageries or Le Marchand de Bestiaux, painted in 1912. The museum tracked the painting on accession cards that recorded loans to other institutions, its return after a 1961-1962 loan, its presence in the museum on April 2, 1965, and an undated later notation that the painting could not be located. The museum first realized the gouache was missing sometime in the late 1960s and confirmed the fact during a complete inventory conducted from 1969 to 1970. It did not notify the New York City Police, the FBI, Interpol, other museums, galleries, or artistic organizations of the theft. In 1974 the museum's Board of Trustees voted to deaccession the gouache and remove it from the museum's records. In May 1967 Rachel Lubell and her husband purchased the gouache from the Robert Elkon Gallery for $17,000. The invoice and receipt listed the prior owner as a named individual who later proved to be the museum mailroom employee suspected of the theft. The Lubells displayed the painting in their home for more than twenty years and exhibited it at the Elkon Gallery in 1967 and again in 1981. In 1985 a private art dealer brought a transparency of the painting to Sotheby's for an auction estimate. A person at Sotheby's who had previously worked at the Guggenheim recognized the gouache and notified the museum, which traced the painting to Mrs. Lubell. On January 9, 1986 the museum's director wrote demanding return of the gouache. Mrs. Lubell refused, and the museum commenced this action for recovery of the painting or $200,000 on September 28, 1987. In her answer Mrs. Lubell raised affirmative defenses including the statute of limitations. The trial court granted her cross motion for summary judgment. The Appellate Division modified by dismissing the statute of limitations defense and denying the cross motion for summary judgment, then granted leave and certified the question whether its order was properly made.
View caseNo. Under notice statutes a subsequent purchaser for value without notice prevails over an earlier unrecorded interest regardless of whether the later purchaser records first. The key requirements remain payment of value and absence of notice at the time of purchase.
No. Recording statutes protect only those who give valuable consideration. Donees, devisees, and heirs receive property without paying value and therefore cannot claim the protections afforded to purchasers for value against prior unrecorded interests.
No. Courts may reform a writing to correct a mutual mistake except to the extent that rights of third parties such as good faith purchasers for value would be unfairly affected. The presence of such a purchaser blocks reformation that would prejudice the protected interest.
Supporting sources
Generally no unless the mortgagee gives new consideration such as surrendering other security or extending the time for payment. A mortgage taken solely for an antecedent debt without fresh value does not qualify the mortgagee as a purchaser for value.
…we are presented for purposes of this appeal with the classic confrontation between a true owner of property and a subsequent bona fide purchaser for value, each of whom is relatively innocent and each of whom has been victimized by a thief. The true owner here is the artist who created the paintings, and she seeks to recover them through an…